Small Business

  • Putting Credit To Work For Your Business

  • Financing For Your Business

    Securing the financing your business needs can play a vital role in your success. To improve the prospects of your loan being approved, pay attention to the guidelines below. By making sure your lender understands your requirements and demonstrating your ability to manage your business, you can make it easier for you to get the funding you require.

    Use your Business Plan, Financial Information, and Cash Flow Statements to present a clear, strong, thorough case to your lender. Once you have these and the bank's application forms, you are ready to follow these four next steps.

    Step One: Approach To Financing - Be prepared and establish a strong relationship with the bank before you need to borrow.

    Step Two: Determine Your Credit Needs - Are they short, medium or long-term? Should you consider SBA Loans?

    Step Three: The Five C's Of Credit - What are they, and what is the lender actually looking for?

    Step Four: Gathering Documentation - Complete this checklist before you apply for a loan.

    Step Five: Preparing Your Loan Request - Spelling Counts! So do a lot of other things - See what they are.

  • Types of Loans

    Short-Term: Such as Business Revolving Lines of Credit for purchasing discounts or short-term working capital.

    Medium-Term: These are Business Installment Loans from 1-5 years for equipment, leasehold improvements or expansion.

    Long-Term: When you purchase your own office space or building, you would use this type of loan.

  • Step One: Approach to Financing

    Make a good first impression by being prepared. Don't apply for the loan on your first trip to the bank. Develop a good relationship with your banker, before asking for money. Do this even if you're not planning on borrowing money in the near future.

    Answer these two questions before you go to the bank:

    • What are your short- and long-term business goals?

    • What are the possible obstacles to attaining your goals?

    Back to Top

  • Step Two: Determine Your Credit Needs

    The type of loan you'll need depends on what you need it for. Answer these five questions:

    • What will I use the money for?

    • How much money do I need? Minimum? Maximum?

    • How long do I need the money for?

    • How will I repay the loan?

    • Do I have other resources or assets I could use to reduce the loan amount?

    Back to Top

  • Step Three: The Five C's of Credit

    When a lender interviews a business owner, they look for answers that fall into these five categories:

    1. Character - Who you are, how long you've lived where you live, been in your business, your past credit obligations, and your standing in your community. This influences impressions about your character.
      Credit History - Your personal credit history weighs heavily, as do how you've repaid obligations in the past. Each may indicate how you'll repay them in the future.

    2. Capital - Do you have adequate resources to support your request? Are they sound, does your business have positive net worth? Do you have sound personal financial statements?

    3. Capacity - Are you able to repay the loan? What will the loan proceeds be used for and how will they be repaid?

    4. Collateral and Guaranties - What will you offer as an alternative source of repayment? These assets and your personal guarantee shows your commitment to the business.

    5. Conditions - What things beyond your control, such as the economy and environmental issues, could affect the financial condition of your business? These are risks to your business.

    Back to Top

  • Step Four: Gathering Documentation

    Here is a borrower's checklist of items to have ready when you approach your lender. The three most important items are:

    • Balance Sheet

    • Income Statement

    • Cash Flow Statement

    More Checklist items:

    • Open an account with your lender

    • Develop a relationship with your banker

    • Collect business documents

    • Make a detailed list of assets and proposed collateral

    • Obtain credit reports in advance. Don't surprise the banker

    • Bring copies of three years personal tax returns

    • Bring a Personal Financial Statement

    • Bring a Business Tax Return if the business is not a start-up

    • Bring a copy of your Business Plan and Marketing Plan

    • Provide detailed breakdown of the use of loan proceeds

    • Organize your loan request package so the lender knows up front what you need the money for, how much you've invested and how you'll pay it back.

    Back to Top

  • Step Five: Preparing Your Loan Request

    Presentation counts! Pay attention to details such as spelling, punctuation, grammar, neatness, visual appeal and organization. The quality of your proposal is a direct reflection on you and your business.

    Your loan request package should include:

    • Cover Page - Your name, company name and address, date of the proposal and the bank you're presenting it to

    • Executive Summary

      • Business Plan

      • Summary of Loan Request

      • Overview of Cash Flow and Collateral

      • Credit History (address problems up front)

      • References

      • Sources of Repayment

    • Documentation - The checklist above is just a beginning. Each bank may have their own requirements. Check first.

    • Conclusion - Be brief. Confirm your belief in the proposal, and express your appreciation for the bank's consideration.

    Back to Top

    Copyright© 2008 Chase Merchant Services, L.L.C. All rights reserved.

    Please consult your branch or relationship manager for the latest rates, fees and closing cost requirements.

    This site is directed at and made available to persons in the United States only. Products and services described as well as associated fees, charges, interest rates and balance requirements may differ among different geographic locations. Not all products and services are offered at all locations.